Student Name:
Class:
Requirement 1:
(a) Correct!
(b) Correct!
(c) Correct!
(d) Correct!
(e) Correct!
(f) Correct!
(g) Correct!
(h) Correct!
Requirement 2:
Balance Sheet Income Statement
Stockholders’ Net
Transaction Assets Liabilities Equity Revenues Expenses Income
(a) NE (5,600) 5,600 5,600 NE 5,600
(b) NE 540 (540) NE 540 (540)
(c) (2,500) NE (2,500) NE 2,500 (2,500)
(d) NE (500) 500 500 NE 500
(e) (1,500) NE (1,500) NE 1,500 (1,500)
(f) 4,000 NE 4,000 4,000 NE 4,000
(g) NE 14,000 (14,000) NE 14,000 (14,000)
(h) NE 500 (500) NE 500 (500)
Problem 04-04
McGraw-Hill
Instructor
Deferred revenue
Accrued expense
Deferred expense
Accrued revenue
Accrued expense
Accrued expense
ZIMMERMAN COMPANY
Deferred expense
Deferred revenue
(a) 8,400$
(b) 18,000$
(c) 2,500$
15,000$
(d)
3,000$
(e) 9,000$
(f) 4,000$
(g) 14,000$
(h) 500$
Employee wages earned but not paid until January, 2015.
Estimated property tax not yet billed or paid.
2014 adjusting entries to be considered:
Depreciation on service truck.
Cost of service truck purchased July 1, 2014.
Cash collected 11/1/2014, to be spread evenly
over next twelve months.
One year insurance premium paid on 11/1/2014.
Service revenue earned but not collected until January, 2015
ZIMMERMAN COMPANY
Collected six months rent on storage space.
Principal (plus 12% interest) on note due 9/30/15.
Student Name:
Class:
(a) Correct!
(b) Correct!
(c) Correct!
(d) Correct!
(e) Correct!
(f) Correct!
(g) Correct!
(h) Correct!
Balance Sheet Income Statement
Stockholders’ Net
Transaction Assets Liabilities Equity Revenues Expenses Income
(a) (3,500) NE (3,500) NE 3,500 (3,500)
(b) (1,350) NE (1,350) NE 1,350 (1,350)
(c) NE 2,600 (2,600) NE 2,600 (2,600)
(d) NE 1,800 (1,800) NE 1,800 (1,800)
(e) 4,000 NE 4,000 4,000 NE 4,000
(f) (150) NE (150) NE 150 (150)
(g) NE 390 (390) NE 390 (390)
(h) NE 7,263 (7,263) NE 7,263 (7,263)
Instructor
Deferred expense
Requirement 1:
Requirement 2:
Deferred expense
Accrued expense
Accrued expense
Deferred expense
Accrued expense
Accrued expense
Accrued revenue
Problem 04-05
McGraw-Hill
MARTIN TOWING COMPANY
(a) 28,000
3,500
(b) 1,000
150
500
(c) 2,600
(d) 1,800
(e) 4,000
(f) 900$
(g) 13,000
12%
(h) 30,000$
30%
Prepaid three-year insurance paid
Bank loan taken for one year
Interest rate on loan
Income before adjustments or taxes
Income tax rate
Contract completed
Given Data P04-05:
Purchased new hauling van
Estimated depreciation for year
2014 Transactions to be considered:
MARTIN TOWING COMPANY
Office supplies purchased for cash
Beginning office supplies inventory
Ending office supplies inventory
Truck repair completed, not yet paid
Estimated property tax on land
Required:
1. What was advertising expense for each company for the most recent year? Where did you find the information?
2.
3.
4.
5.
6.
This workbook is organized as follows:
Sheet Name Contents
CP4-3 (this worksheet) CP4-3 Problem Requirements and Workbook Layout
Industry Ratio Report Industry Ratio Report
AEO Balance Sheets American Eagle Outfitters, Inc. Consolidated Balance Sheets
AEO Income Statements American Eagle Outfitters, Inc. Consolidated Statements of Operations
AEO Stmts of Stockholders’ Eq American Eagle Outfitters, Inc. Consolidated Statements of Stockholders’ Equity
AEO Statements of Cash Flow American Eagle Outfitters, Inc. Consolidated Statements of Cash Flows
AEO Note 2 Note 2 to the financial statements for American Eagle Outfitters, Inc.
Urban Balance Sheets Urban Outfitters, Inc. Consolidated Balance Sheets
Urban Income Statements
Urban Stmts of Stockholders’ Eq Urban Outfitters, Inc. Consolidated Statements of Stockholders’ Equity
Urban Stmts of Cash Flow Urban Outfitters, Inc. Consolidated Statements of Cash Flows
Urban Note 2 Note 2 to the financial statements for Urban Outfitters, Inc.
CP4-3 Comparing Companies within an Industry
Urban Outfitters, Inc. Consolidated Statements of Income
Both companies have a note to the financial statements explaining the accounting policy for advertising. How do the
policies differ, if at all?
Compute the percentage of Advertising Expense to Net Sales for the most recent year for both companies. Which
company incurred the higher percentage? Show computations. Are you able to perform the same comparison for the
previous two years? If so, show the computations. If not, explain why not.
Compare the Advertising Expense to Net Sales ratio for the most recent year computed in requirement (2) to the
industry average found in the Industry Ratio Report. Were these two companies spending more or less than their
average competitor on advertising (on a relative basis)? What does this ratio tell you about the general effectiveness of
each company’s advertising strategy?
Compute each company‘s total asset turnover ratio for the three years reported. What do your results suggest to you
about each company over time and in comparison to each other?
Compare each company‘s total asset turnover ratio for the most recent year to the industry average total asset turnover
ratio in the Industry Ratio Report. Where these two companies performing better or worse than the average company in
the industry?
2.67
Company
Ticker
1.48 ANF
ARO
AEO
4.92 ASNA
100.820 days BWS
97.49 CHS
12.63 days PSS
7.43 DDS
1.75 DSW
11.55 FL
GCO
GES
42.47% JOSB
12.37% SKS
5.40% SIG
13.61% SSI
9.09% BKE
1.81 PLCE
FINL
MW
92.35 URBN
Total Debt/Total Equity
0.70
1.70
15.24%
1.49%
5.55%
8.87%
2.62
16.10
Activity
American Eagle Outfitters
INDUSTRY RATIO REPORT
CP4-3 Home
Retail Family Clothing Stores
Liquidity
COMPANIES USED IN INDUSTRY ANALYSIS
Current Ratio
Quick Ratio
Abercrombie & Fitch
Aeropostale Inc.
Inventory Turnover
Ascena Retail Group, Inc.
Days to Sell Inventory
Brown Shoe Company
Receivables Turnover
Chico’s FAS Inc.
Average Collection Period
Collective Brands Inc.
Fixed Asset Turnover
Dillard’s Inc.
Total Asset Turnover
DSW Inc.
Accounts Payable Turnover
Foot Locker Inc.
Genesco Inc.
Profitability
Guess? Inc.
Gross Profit Margin
Jos. A. Bank Clothiers Inc.
Operating Profit Margin
Saks Inc.
Net Profit Margin
Signet Jewelers Ltd.
Return on Equity
Stage Stores Inc.
Return on Assets
The Buckle Inc.
Quality of Income
The Children’s Place
The Finish Line Inc.
Leverage
The Men’s Warehouse Inc.
Times Interest Earned
Urban Outfitters
Total Assets/Total Equity
Dividends
Dividend Payout
Dividend Yield
Other
Advertising-to-Sales
Sales Growth
Capital Acquisitions Ratio
Price/Earnings
January 28, January 29,
2012 2011
$ 719,545 $ 667,593
25,499 67,102
378,426 301,208
40,310 36,721
74,947 53,727
48,761 48,059
1,287,488 1,174,410
582,162 643,120
39,832 7,485
11,469 11,472
13,467 19,616
16,384 23,895
$ 1,950,802 $ 1,879,998
(in thousands, except per share amounts)
AMERICAN EAGLE OUTFITTERS, INC.
CP4-3 Home
CONSOLIDATED BALANCE SHEETS
Property and equipment, at cost, net of accumulated depreciation
ASSETS
Current assets:
Cash and cash equivalents
Short-term investments
Merchandise inventory
Accounts and note receivable
Prepaid expenses and other
Deferred income taxes
Total current assets
Intangible assets, at cost, net of accumulated amortization
Goodwill
Non-current deferred income taxes
Other assets
Total assets
$ 183,783 $ 167,723
42,625 34,954
76,921 70,390
20,135 32,468
44,970 41,001
15,066 16,203
21,901 25,098
405,401 387,837
71,880 78,606
35,471 38,671
21,199 23,813
128,550 141,090
– –
– –
2,496 2,496
552,797 546,597
28,659 28,072
1,771,464 1,711,929
(938,565) (938,023)
1,416,851 1,351,071
$ 1,950,802 $ 1,879,998
Accrued income and other taxes
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
Accrued compensation and payroll taxes
Accrued rent
Commitments and contingencies
Unredeemed gift cards and gift certificates
Current portion of deferred lease credits
Other liabilities and accrued expenses
Total current liabilities
Non-current liabilities:
Deferred lease credits
Non-current accrued income taxes
Other non-current liabilities
Total non-current liabilities
Retained earnings
Treasury stock, 55,718 and 55,200 shares, respectively, at cost
Total stockholders‘ equity
Total liabilities and stockholders’ equity
Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000 shares authorized; none issued and outstanding
Common stock, $0.01 par value; 600,000 shared authorized; 249,566 and 249,566 shares
issued; 193,848 and 194,366 shares outstanding , respectively
Contributed capital
Accumulated other comprehensive income
January 28, January 29, January 30,
2012 2011 2010
$ 3,159,818 $ 2,967,559 $ 2,940,269
2,031,477 1,796,600 1,766,839
1,128,341 1,170,959 1,173,430
735,828 713,197 725,278
20,730 – –
140,647 140,501 137,760
231,136 317,261 310,392
– (24,426) (2,749)
5,874 2,249 (3,268)
237,010 295,084 304,375
85,305 113,150 90,977
151,705 181,934 213,398
– (41,287) (44,376)
$ 151,705 $ 140,647 $ 169,022
$ 0.78 $ 0.91 $ 1.04
– (0.21) (0.22)
$ 0.78 $ 0.70 $ 0.82
$ 0.77 $ 0.90 $ 1.02
– (0.20) (0.21)
$ 0.77 $ 0.70 $ 0.81
194,445 199,979 206,171
196,314 201,818 209,512
Selling, general and administrative expenses
AMERICAN EAGLE OUTFITTERS, INC.
CP1-3 Home
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended
(In thousands, except per share amounts)
Net sales
Cost of sales, including certain buying, occupancy and warehousing expenses
Gross profit
Basic income per common share:
Loss on impairment of assets
Depreciation and amortization expense
Operating income
Realized loss on sale of investment securities
Other income (expense), net
Income before income taxes
Provision for income taxes
Income from continuing operations
Loss from discontinued operations, net of tax
Net income
Diluted net income per common share
Weighted average common shares outstanding – basic
Weighted average common shares outstanding – diluted
Income from continuing operations
Loss from discontinued operations
Basic net income per common share
Diluted income per common share:
Income from continuing operations
Loss from discontinued operations
January 28, January 29, January 30,
2012 2011 2010
$ 151,705 $ 140,647 $ 169,022
– (1,140) 14,506
– 7,541 940
587 4,833 15,781
587 11,234 31,227
$ 152,292 $ 151,881 $ 200,249
AMERICAN EAGLE OUTFITTERS, INC.
CP4-3 Home
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended
Foreign currency translation gain
Other comprehensive income
Comprehensive income
(In thousands)
Net income
Other comprehensive :
Temporary (impairment) recovery related to investment securities, net of tax
Reclassification adjustment for realized losses in net income related to investment securities, net of tax
Accumulated
Shares Other
Outstanding Common Contributed Retained Treasury Comprehensive Stockholders’
(1) Stock Capital Earnings Stock (2) Income (loss) Equity
205,281 $ 2,485 $ 513,574 $ 1,694,161 $ (786,800) $ (14,389) $ 1,409,031
41 1 39,903 – – – 39,904
(18) – – – (247) – (247)
1,528 – – (15,228) 27,792 – 12,564
– – – 169,022 – – 169,022
– – – – 31,227 31,227
– – 922 (83,906) – – (82,984)
206,832 2,486 554,399 1,764,049 (759,255) 16,838 1,578,517
997 10 36,229 – – – 36,239
(15,500) – – – (216,070) – (216,070)
(1,035) – – – (18,041) – (18,041)
3,072 – (45,841) (7,791) 55,343 – 1,711
– – – 140,647 – – 140,647
– – – – – 11,234 11,234
– – 1,810 (184,976) – – (183,166)
194,366 2,496 546,597 1,711,929 (938,023) 28,072 1,351,071
– – 10,532 – – – 10,532
(1,365) – (15,160) – (15,160)
(145) – – – (2,189) – (2,189)
992 – (5,997) (4,261) 16,807 – 6,549
– – – 151,705 – – 151,705
– – – – – 587 587
– – 1,665 (87,909) – – (86,244)
$ 193,848 $ 2,496 $ 552,797 $ 1,771,464 $ (938,565) $ 28,659 $ 1,416,851
Note 1
Note2
Reissuance of treasury stock
AMERICAN EAGLE OUTFITTERS, INC.
CP4-3 Home
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except per share amounts)
Balance at January 31, 2009
Stock awards
Repurchase of common stock from employees
Balance at January 29, 2011
Net income
Other comprehensive income, net of tax
Cash dividends and dividend equivalents ($0.40 per share)
Balance at January 30, 2010
Stock awards
Repurchase of common stock as part of publicly announced programs
Repurchase of common stock from employees
Reissuance of treasury stock
Net income
Other comprehensive income, net of tax
Cash dividends and dividend equivalents ($0.93 per share)
Cash dividends and dividend equivalents ($0.44 per share)
Balance at January 28, 2012
600,000 authorized, 249,566 issued and 193,848 outstanding, $0.01 par value common stock at January 28, 2012; 600,000 authorized, 249,566
issued and 194,366 outstanding, $0.01 par value common stock at January 29, 2011; 600,000 authorized, 249,561 issued and 206,832
outstanding (excluding 992 shares of non-vested restricted stock), $0.01 par value common stock at January 30, 2010; The Company has 5,000
authorized, with none issued or outstanding, $0.01 par value preferred stock at January 28, 2012, January 29, 2011, and January 30, 2010.
55,718 shares, 55,200 shares, and 41,737 shares at January 28, 2012, January 29, 2011, and January 30, 2010, respectively. During Fiscal
2011 and Fiscal 2010 and Fiscal 2009, 992 shares, 3,072 shares and 1,528 shares, respectively, were reissued from treasury stock for the
issuance of share-based payments.
Stock awards
Repurchase of common stock as part of publicly announced programs
Repurchase of common stock from employees
Reissuance of treasury stock
Net income
Other comprehensive income, net of tax
January 28, January 29, January 30,
2012 2011 2010
$ 151,705 $ 140,647 $ 169,022
– 41,287 44,376
$ 151,705 $ 181,934 $ 213,398
143,156 145,548 139,832
12,341 25,457 34,615
4,207 11,885 (36,027)
356 15,648 7,995
(373) (12,499) (2,812)
(325) 117 6,477
20,730 – –
– 25,674 3,689
(77,311) 18,713 (33,699)
(3,589) (3,790) 6,656
(21,261) (9,045) 12,916
2,444 (1,380) 1,146
17,934 5,232 8,358
3,979 1,713 (3,591)
(7,837) (7,451) 4,667
Accrued compensation and payroll taxes
7,677 (19,618) 25,841
(15,515) 11,999 12,858
938 12,457 (1,993)
87,551 220,660 186,928
239,256 402,594 400,326
(100,135) (84,259) (127,080)
(34,187) (2,801) (2,003)
(193,851) (62,797) –
240,797 177,472 80,353
(87,376) 27,615 (48,730)
(3,256) (2,590) (2,015)
– (30,000) (45,000)
(15,160) (216,070) –
Repurchase of common stock as part of publicly announced programs
(2,189) (18,041) (247)
5,098 7,272 9,044
373 12,499 2,812
– (6,434) (1,414)
(85,592) (183,166) (82,985)
(100,726) (436,530) (119,805)
798 1,394 3,030
– (21,434) (13,864)
– (6) (339)
– – –
– – –
– (21,440) (14,203)
51,952 (26,367) 220,618
667,593 693,960 473,342
$ 719,545 $ 667,593 $ 693,960
AMERICAN EAGLE OUTFITTERS, INC.
CP4-3 Home
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended
Excess tax benefit from share-based payments
(In thousands)
Operating activities:
Net income
Loss from discontinued operations, net of tax
Income from continuing operations
Adjustments to reconcile income to net cash provided by operating activities:
Depreciation and amortization
Share-based compensation
Provision for deferred income taxes
Tax benefit from share-based payments
Accrued income and other taxes
Foreign currency transaction (gain) loss
Loss on impairment of assets
Realized investment losses
Changes in assets and liabilities:
Merchandise inventory
Accounts receivable
Prepaid expenses and other
Other assets
Accounts payable
Unredeemed gift cards and gift certificates
Deferred lease credits
Repayment of note payable
Accrued liabilities
Total adjustments
Net cash provided by operating activities from continuing operations
Investing activities:
Capital expenditures for property and equipment
Acquisition of intangible assets
Purchase of available-for-sale securities
Sale of available-for-sale securities
Net cash (used for) provided by investing activities from continuing operations
Financing activities:
Payments on capital leases
Net cash used for financing activities
Repurchase of common stock from employees
Net proceeds from stock options exercised
Excess tax benefit from share-based payments
Cash used to net settle equity awards
Cash dividends paid
Net cash used for financing activities from continuing operations
Effect of exchange rates on cash
Cash flows of discontinued operations
Net cash used for operating activities
Net cash used for investing activities
Effect of exchange rates on cash
Net cash used for discontinued operations
Net (increase) decrease in cash and cash equivalents
Cash and cash equivalents – beginning of period
Cash and cash equivalents – end of period
AMERICAN EAGLE OUTFITTERS
Note 2 to the Financial Statements
CP4-3 Home